Missouri's Revenue Chief Resigns After Taxpayers Face Surprises

Missouri Revenue Director Joel Walters first joined the department in April 2017.

Missouri Gov. Mike Parson announced the resignation of Department of Revenue Director Joel Walters on Friday morning, a move made after months of criticism over the agency’s handling of income tax withholdings.

The issue has led to thousands of Missouri taxpayers either receiving lower refunds or seeing higher bills on their 2018 tax returns, although they will not pay more in overall taxes.

Parson said in a news release that he received Walters' resignation letter on Thursday and his last day will be March 22. Ken Zellers, the Department of Revenue's chief operating officer, was named acting director.

"I appreciate Joel Walters' willingness to devote two years of service to the State of Missouri," Parson said in a statement. "His leadership and transformative vision helped to turn around the Department of Revenue, leading to increased customer service, identifying efficiencies that led to significant budget savings and implementing a number of conservative reforms that helped improve and streamline services for Missouri taxpayers."

But it was Walters' own decision that led to his resignation. He initially said the federal tax changes, including an increase in the standard deduction, exposed a longstanding miscalculation in Missouri’s tax tables, but he reversed course last month.

He told the House Special Committee on Government Oversight on Feb. 27 that he ordered a change the state tax tables in an attempt to reduce the potential impact of taxpayers withholding too much. But earlier this year, he said, new State Treasurer Scott Fitzpatrick corrected him, saying there had been no error.

The committee has held hearings on the issue, with lawmakers saying the agency did not do enough to alert taxpayers of the situation. The last straw for many legislators came after a Columbia Daily Tribune report this week that said agency officials downplayed the potential impact of the withholdings issue to taxpayers.

The newspaper used the state’s Sunshine Law to reveal the agency removed language from a press release that directly advised taxpayers to increase their tax withholdings to avoid surprises when they filed.

“Missouri taxpayers deserve competency and honesty in their state agencies. The Department of Revenue's failures and subsequent coverup will impact the pocketbooks and trust of many Missourians,” Rep. Robert Smith, R-Yukon, and chairman of the oversight committee, said in a statement released Thursday night. “As legislators, we have a duty to hold bureaucrats accountable when they're not forthright with the taxpayers, and I've never shied away from that. I have confidence that Gov. Parson will select a qualified replacement with the ability to rectify these issues moving forward.”

House Speaker Elijah Haahr also supported the move, calling it "a step forward."

Lawmakers said the withholding miscalculation is part of the reason state revenue collections are down more than $300 million year over year. Budget drafters anticipate that number will turn around as more tax returns are filed, but Democrats warn of budget cuts if it doesn’t.

“Had we had transparency, our citizens would not be faced with lower refunds coming up this year or higher tax bills that they’re going to have to pay,’ said Rep. Barbara Washington, a Kansas City Democrat and a member of the House Budget Committee. “And possibly the state would not be down hundreds of millions of dollars in revenue today.”

Walters was appointed by former Gov. Eric Greitens to head the Revenue Department in April 2017, after 35 years in the private sector. That included time as a partner with the PricewaterhouseCoopers in New York and Washington, D.C.

Samuel King is the Missouri government and politics reporter at KCUR 89.3. Follow him on Twitter: @SamuelKingNews

Any member of the public can go to the debates in Missouri House or Senate. And in November, voters said the discussions about legislation and strategy that lawmakers have in emails and other documents should be public knowledge, too.

But some legislators are looking to once again shield those records from public view, a move that opponents say is a step backward for government openness and transparency.